JERUSALEM — The Palestinian president warned today that he would not accept a U.S. proposal for resuming peace talks unless Israel stops building homes for Jews in disputed east Jerusalem.

Mahmoud Abbas’ position complicated already troubled American efforts to restart peace talks. Israeli hard-liners say they won’t accept the proposed 90-day moratorium on new settlement construction in the West Bank if it also includes east Jerusalem.

The Palestinians say there can’t be peace talks if Israel continues to build homes in captured territories where they want to establish an independent state. In Cairo on Sunday, Abbas said any construction freeze must include east Jerusalem “first and foremost.”

“If the moratorium does not apply to all Palestinian territories, including east Jerusalem, we will not accept it,” Abbas said after consultations with President Hosni Mubarak of Egypt.

Israeli Prime Minister Benjamin Netanyahu said in a statement Sunday that he would bring the issue of a renewed slowdown before his Cabinet only after the U.S. lays out the details in writing. Then, he said, “I am sure my fellow ministers will approve it, because this is what is good for Israel.”

Netanyahu did not mention Jerusalem in his statement. He also denied reports that a central aim of the proposed 90-day settlement slowdown was for both sides to agree on final borders between Israel and a future Palestine during that period. With borders determined, Israel could then resume building on any territories it would expect to keep under a final peace deal, defusing the settlement issue.

“There is no such request and there is no such commitment,” Netanyahu said in the statement.

The U.S. has been pushing Israel to impose a new moratorium to draw Palestinians back to the negotiating table. As an incentive, Washington has offered Israel a fleet of next-generation stealth warplanes and promises to veto anti-Israel resolutions at the United Nations.

But the ultra-Orthodox Shas Party, which holds the swing votes in the inner Cabinet that is to vote on the moratorium, has demanded a written assurance from the U.S. that construction in east Jerusalem would not be affected.

Also Sunday, an Israeli military court handed down a three-month suspended prison sentence to two soldiers convicted of using a 9-year-old Palestinian boy as a human shield during last year’s Gaza Strip war. The soldiers were also demoted.

The court said the soldiers asked the boy to open bags in a building they took over, fearing explosives were inside.

The soldiers’ conviction last month was the most serious in connection with the war. The sentence appeared light; the soldiers had faced up to three years in prison.

International rights groups have accused Israel of failing to properly investigate alleged wrongdoing by troops during the three-week military operation. Some 1,400 Palestinians were killed, including more than 900 civilians, according to Palestinian figures and international human rights groups.

The Palestinians claim the West Bank, east Jerusalem and the Hamas-ruled Gaza Strip for a future independent state.

Peace talks between Israel and the Palestinian government in the West Bank broke down weeks after they began with the expiry of an earlier, 10-month building slowdown in the West Bank.

Israel claims east Jerusalem — captured in the 1967 Mideast war — as an integral part of its capital. Palestinians hope to establish their future capital in east Jerusalem.

The initial moratorium did not apply to east Jerusalem, though in practice, construction was curbed there, as well as in the West Bank. A total of 500,000 Jews live in both areas.

Netanyahu also faces criticism within his own Likud Party, where several ministers have endorsed a settler campaign against construction limitations. Hundreds of Jewish settlers — many of them youths who skipped school — demonstrated against any construction limits outside Netanyahu’s office on Sunday.

“We came here as a part of our campaign to prevent the great damage that the renewal of the moratorium and submitting to American pressure can do to Israel’s self interest,” said Dani Dayan, a leader of the settlers’ council.

A former U.S. ambassador to Israel, Dan Kurtzer, had harsh words for the dealmaking. He accused Washington of preparing “to reward Israel for its bad behavior.”

Writing in The Washington Post on Saturday, Kurtzer also warned that America’s commitment to Israel’s security — once insulated from politics — would become “merely a bargaining chip with which to negotiate what Jerusalem will or will not do to advance the peacemaking.”

Also Sunday, Israel approved a five-year renovation plan near the Western Wall, the holiest site where Jews can pray, and in the adjacent Jewish Quarter in Jerusalem’s hotly contested Old City.

Government spokesman Mark Regev said the budget would be for maintenance work only and does not cover areas that house disputed shrines holy to both Jews and Muslims.

“The Western Wall brings millions of tourists each year,” Regev said. “This money is for upkeep and preservation and in no way does this change the status quo.”

“Any Israeli activities in the occupied part of Jerusalem are illegal,” Khatib said. “It’s not healthy as far as the peace process is concerned because peace would require the end of the occupation of east Jerusalem.”

The Israeli renovation plan does not include the Mughrabi Gate next to the Western Wall. Israeli construction there sparked violent Palestinians protests in 2007.